Posted by: Matt Shanahan
Managing capacity, load and yield are critical to optimizing revenue and profits. Airlines, hotels, rental car agencies, and others have employed revenue optimization strategies for years to remain competitive and in business.
Facing radical change and deregulation, it was the airline industry’s ability to manage revenue capacity (number of seats), load (percentage sold), and yield (revenue per passenger per mile) that allowed incumbents to fight off upstarts. To optimize digital media revenues, publishers must adopt and adapt similar capacity, load and yield practices within their revenue operations.
For digital publishers:
- Revenue capacity is the number of impressions for sale on a monthly basis.
- Load is the percentage of impressions sold.
- Yield is the average revenue per impression.
In our work with digital media and news organizations, the difference between publishers guessing vs. managing their revenue is the ability to understand the distribution of their impressions and correlate that revenue capacity to the load and yield of their advertising. Let me explain.
One of the first analysis Scout Analytics™ performs for publishers is an Engagement Map™, which provides an inventory of impressions down to the individual user – Which impressions come from fans vs. fly-bys? For frequent visitors, do they have consistent behavior? – This segmentation and analysis of impression provides publishers with new targeting parameters and controls as well as accurate forecasting of reach and frequency.
With the Engagement Map, a publisher can answer questions such as whether they have too much or too little capacity. For example, a newspaper publisher may have a highly engaged audience generating a large inventory of in-market, male, sports impressions.
- If the load for this demographic is low, the publisher needs to find new advertisers or stop building capacity.
- If the load is high, the publisher can increase the price of the placements to increase yield or implement audience development programs to increase capacity.
By managing capacity, load and yield, a publisher can establish measurable goals, track progress against those goals, and ultimately optimize revenue.
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